Options Limited in Debt Ceiling Mess
The "unexpected" debt limit mess has persisted far too long for anything better than the least bad outcome to be anticipated.
July 21, 2011 - 12:00 am
There are many approaches to the current debt limit mess and few of them are likely to work. The Cut, Cap and Balance bill that recently passed the House is unlikely to pass the Democratic-controlled Senate and, even if it did, President Obama has said that he would veto it. Even if he signed it, eventual ratification of the contemplated constitutional amendment by two-thirds of the states would be needed lest we be right back where we are — except for a big and quick increase in the debt limit likely followed by another in due course.
The Gang of Six plan, which President Obama seems to like, consists of five pages of highly non-specific language. If set to music, it might be a charming lullaby to put us to sleep. Beyond that, however, in its present form it can’t take effect anytime soon. It first has to be converted into legislative language and then evaluated by the Congressional Budget Office; as of now, there is nothing capable of being evaluated or enacted.
Nothing else presently in play is likely to pass the Congress by August 2, or even soon thereafter. Still, something will be done — perhaps just standing by and continuing to blather as the magic date comes and passes, with the problems unresolved and getting worse. There is likely no good outcome, nor, in view of our profligate spending, can one reasonably be expected. The “unexpected” debt limit mess has persisted far too long for anything better than the least bad outcome to be anticipated.
The debt limit mess has distracted us from other problems potentially even more severe than our domestic tribulations. The situations in the Middle East, on the Korean peninsula, in China, and in Russia continue to fester; the leaders there haven’t been kind enough to call a time out while we get our domestic act together. As we continue to fret, fume, and mumble it seems likely that they are thinking of ways to promote their own agendas rather than ours. The longer we take, the longer they will have and the less prepared — or even able — we will be to respond.
An interesting proposal was made by a Mr. Tony Blankley and published by Rasmussen as a way to get past the current debt limit mess. After explaining the lack of rationality embedded in the mess and in the reactions to it, he suggests:
The House should pass a debt ceiling rising for 190 days that raises the ceiling by about $1 trillion. The president said he would not sign a short-term bill as long as 180 days. Give him something he could sign without contradicting himself.
Ten days more than President Obama has already rejected seems unlikely to be accepted, unless as a part of the Gang of Six plan as a stop-gap ploy; while apparently thinking that courageous restraint is good on a real battleground, President Obama does not seem to find it acceptable for himself or for his colleagues at home. In any event, it is unclear how the debt ceiling would revert even to the current one or what incentives there might be to make that happen.
Attach to it about $1 trillion in discretionary spending cuts as identified by the Vice President Joe Biden-led negotiations. That would get real cuts and wouldn’t let Washington kick the can past the next election.
Spending cuts not put into specific legislative language capable of analysis by the Congressional Budget Office are meaningless. They are worse than a pig in a poke: at least with that it’s possible to know how much the pig weighs and whether it is alive or dead and rotting.
Then the House Ways and Means Committee should start hearings and markup on a general corporate tax reform that would lower rates and reduce or eliminate many credits, deductions and advanced schedules. That would take at least three months to negotiate but should yield both a more efficient system and more revenue (about $100 billion a year — while lowering rates).